When our parents were younger, and they wanted to buy the latest album of their favourite band, they’d pick up a record. Then came tapes and CDs, followed by MP3s, until suddenly everyone was streaming music through Spotify and Apple Music.
Today we may have entered a new era.
Kings of Leon has become the first band to release an album in the form of a non-fungible token (NFT), which is a type of cryptocurrency that contains unique assets such as… music.
If you’re feeling a bit left behind, don’t worry: you’re not alone.
While NFTs have been around for years, they have exploded in popularity in recent weeks.
In fact, the trading volume across the top three NFT marketplaces in February came to US$342 million, while the trading volume for the whole of 2020 was US$200 million.
So, what’s all the fuss about?
Put simply, NFTs are unique digital tokens living on a blockchain. Using NFTs, you — and only you — can buy ownership of a digital good, such as a Kings of Leon album or an artwork.
You see, because NFTs are unique, there can only be one owner at any time.
So, if you buy a Kings of Leon NFT, you are the owner of it. In the case of the Kings of Leon NFTs, each one has a value beyond the album. For example, one gives you — and only you, as the owner — access to Kings of Leon concerts for the rest of your life.
But that doesn’t mean that artwork can’t be seen unless in a museum.
For example, someone paid US$6.6 million for a video by Beeple, and I can view that video by Beeple, for free, on the web.
I just can’t own it (unless, of course, I’m the one who paid that US$6.6 million)!
And that’s where it gets interesting.
People are collecting NFTs the same way they have always collected unique pieces of art. While many people have viewed the Mona Lisa, for example, there can only be one owner of the Mona Lisa at any given time. NFTs work in much the same way.
And because most NFTs are part of the Ethereum blockchain, which is the second biggest blockchain in the world after Bitcoin, ownership of an NFT is quite secure.
It seems unlikely a NFT could be subject to an art heist the way the Mona Lisa was.
What is likely is that this is just the beginning for NFTs.
